From:	Baroni Limited [baroni-limited@tiscali.it]
Sent:	10 June 2007 21:04
Subject:	Baroni Limited - Offshoring Newsletter' - 18/07

Importance:	High
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Capitalise on 'China India' collaboration to remain competitive, says Gartner
Firms considering offshoring should develop IT strategies to exploit the growing capabilities of Chinese and Indian IT consultancies and software developers, analyst firm Gartner has advised.  China and India are beginning to collaborate to offer UK firms’ sophisticated IT consultancy and software development services that will match the quality of Western suppliers by 2010, Gartner said.
'To stay competitive in the global economy it is imperative that IT organisations implement a 'Chindia' strategy,' said Jamie Popkin, group vice-president at Gartner Research.
'Indian firms bring world-class software expertise and leadership in global markets, and Chinese partners have legions of capable, low-cost employees and greater know-how with clients in Japan, Korea and other Asian countries where English is less prevalent,' he said.
Far from being simply a source of cheap labour, both countries will soon be able to compete for global business on competence and capability, said Gartner.  'China and India are producing some of the world's best-trained computer science and electrical engineering graduates,' said Gartner vice-president Partha Iyengar.  'By partnering, Chinese and Indian enterprises will have access to complementary skills and resources and, in turn, will have the potential to offer a much wider array of services for companies looking to offshore.'
In 1995-1996, India's exports of IT services were worth about $1M, and in 2004 they were worth $13bn.  In 2000, India's share of business process outsourcing was worth $148M.  In 2004 it was worth $3.5bn, according to Gartner figures.
The analyst firm said that UK companies still had concerns over what they describe as 'challenging logistics, stifling bureaucracy and corrupt officials' in India.  'However, the vast majority of the global Fortune 1,000 companies have agreed that India is worth the effort,' said Iyengar.	

 	
 Top Stories	
 	
U.S. enterprise IT spending to reach $844 billion this year, says Info-Tech Research Group
Annual U.S. enterprise spending on Information Technology (IT) operations and acquisitions will reach $1.033 trillion in 2010, largely driven by acquisition spending on storage technology and software, according to a study from Info-Tech Research. The study reveals a trend for higher growth in acquisitions spending led by large enterprises, given reduced operational costs from offshore outsourcing.
German SMEs to spend $37.7bn on IT - study
According to a study by AMI-Partners, small and medium businesses (SMBs) in Germany are likely to spend about $37.7 billion to upgrade their IT infrastructure and solutions in 2007, reflecting an increase of 5% in expenditure over 2006.  Growth in the expenditure is expected to be primarily fuelled by the computing (such as servers, PCs/PDAs, printers, and peripherals) and IT service requirements.  In addition, German SMBs are expected to spend about $3.2 billion on IT storage and $1.2 billion on IT security in 2007, each reflecting a 15% increase over 2006.
CC slashes £30M costs as India base goes live
Clifford Chance has embarked on a new cost cutting drive with a major up-scaling of its offshoring programme in India and a £10M IT investment to maintain average profit per equity partner (PEP), which last week tipped over the £1m mark for the first time.  Clifford Chance has been trialling a shared services operation in Delhi, which is set to go live this month, with London services going offshore, followed by the firm's German and US back office operations.
Fund manager Resolution outsourcing IT and customer services to Capita Group
Fund manager Resolution signed a £580M outsourcing deal with outsourcing specialist Capita Group.  Under the partnership, about 2,000 Resolution staff are to transfer to Capita by August.  It also aims to move a number of its key back-office functions to India.
HSBC expanding Philippine operations
Hong Kong and Shanghai Banking Corporation (HSBC) plans to expand its BPO operations in the Philippines.  The bank is planning to increase its BPO headcount from 5,500 at present to 9,000 by the end of 2008 in the country.  It also plans to open its third BPO centre with a seating capacity of about 4,500 professionals, while the other two BPO centres, which are located at Manila City, the Philippines, are collectively housing about 5,500 professionals.
Northstar Awards Outsourcing Deal to CSC
Northstar Financial Services has awarded a five-year business process outsourcing (BPO) deal to CSC.  The financial terms of the deal have not been disclosed.  The company will provide the entire range of back-office and technical support services, such as end-to-end policy administration, bi-lingual call-centre services (in Spanish and English), business and payment processing and commission processing services to Northstar.
Linklaters brings in Unisys for global IT systems overhaul
Linklaters have signed an ITO contract under which Unisys will provide a wide range of IT services for Linklaters' worldwide operations across 23 countries.  These services include managing of Linklaters' data centres across the US, the UK, and Hong Kong, and support for Linklaters' other IT infrastructure including office servers, printers, and storage devices.  Unisys will provide these services both onsite and offsite.	
 	
 Service Provider News	
 	
EPO to keep the Indian BPO story rolling
India's engineering process outsourcing (EPO) business would grow 10-fold over the next seven years to touch $30 billion and make the country a major hub in this area, says a study released last week.
Xansa travels far on its ambitious offshore outsourcing
Logica recently came “tail between legs” to tell the market that revenues from its UK business slid 15% in the first quarter.  As well as some contract-specific issues, Chief Executive Martin Read conceded that the company had not pushed its model of blending on and offshoring hard enough.  Smaller rival Xansa tells quite a different story and reported a 7% increase in sales in the first half.  From a low-growth, low-margin business of managing applications, Xansa has moved into the high-growth, high-margin business process outsourcing market.  With its finance, accounting and human resources operations, it now competes with the likes of Accenture for big corporate customers, from the Royal Mail to Boots
Xchanging secures £8.5m HR contract with Selex Sensors & Airborne Systems
Xchanging will extend its provision of HR services to electronic systems provider Selex Sensors & Airborne Systems UK after signing a five-year, £1.7m annual contract renewal.
Fiserv to set up new service delivery centre in Pune
The Pune centre is being set up in a 100,000 square foot area in Kalyani Nagar area, with the capacity to house 1,500 professionals. The centre will house 1,000 people in the next one year and will be its second centre following the one in NOIDA which employs 1,100 people.
Convergys signed a 10-year agreement with Johnson & Johnson
Convergys has won a 10-year human resource outsourcing (HRO) contract from Johnson & Johnson Services under which Convergys will offer a wide range of HR services to Johnson & Johnson's worldwide operations. The deal is likely to generate revenues worth up to $1bn for Convergys.
Suddenlink Signs Billing Managed Services Contract with Convergys
Convergys Corporation announced today a six-year managed services billing contract with Suddenlink Communications, a top-10 U.S. operator of cable broadband systems, serving approximately 1.4 million customers.
TCS opens delivery centre in Mexico
TCS said it has set up a global delivery centre in Mexico as part of its plan to expand operations in Latin America and will hire 500 people for the purpose this year	

If you wish to know any more about any of these articles, or how Baroni and it’s global partners could help you, then please feel free to contact us.
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